Chinese smartphone makers Huawei, ZTE target top tier

BARCELONA (Reuters) - China's Huawei, little known to consumers just a couple of years ago, is now leading the pack of smartphone makers chasing Apple and Samsung, with ZTE, another Chinese company, snapping at its heels.

Huawei, which sold 32 million smartphones in 2012, up 60 percent on 2011, unveiled its new flagship Ascend P2 smartphone in Barcelona, boasting a connection speed of 150 MB per second, the fastest on the market.

The company was third in smartphone sales in the final quarter of 2012, according to research firm IDC, with ZTE in fifth place and Sony sandwiched in between. Samsung and Apple, however, were far in front with half the market between them.

Wan Biao, chief executive of Huawei Device Co, said the Ascend P2's faster download speeds would make a difference to customers using 4G networks in countries such as Japan.

The device also includes power-saving technology, developed using expertise from its networks business, which Biao said helped it stand out against other high-end phones running Google's Android software.

"Our target is for Huawei to provide the best smartphones in the world, better than the iPhone, better than Samsung," he said in an interview on Monday. "Our target is top three in market share."

Huawei, which became established by selling unbranded phones to operators, said the Ascend P2 would be available from the second quarter priced at 399 euros, hundred of euros less than flagship devices from its rivals.

Biao said that the company was still establishing itself as a brand in the minds of consumers, so its phones did not attract high subsidies from network operators.

"Operators give a high subsidy to Samsung and Apple," he said. "We have a very high quality product but the price we set is not as high as these two smartphones; we have to develop differentiated products."

Analyst Carolina Milanesi at Gartner said the Ascend P2 was a notable step forward for the Chinese company, showing a focus on the most important aspects for consumers, such as speed, an impressive screen and longer battery life.

ZTE, which also developed its technology by making devices for others, is equally ambitious. On Monday, it said it expected to increase smartphone revenue by 30 percent this year.

"We at ZTE consider ourselves as not tier one yet, we see ourselves as tier two, comparable to HTC, Sony and Motorola," He Shiyou, head of mobile services division, said in an interviewer via a translator. "We have to be as aggressive as possible."

He said ZTE would reduce its product range to achieve larger sales of fewer models, and focus on the strongest markets for smartphones - the United States, China, Europe and Australia.

It previously took ZTE six months to catch up with the Samsung's software and hardware specifications, he said, but now it only took a quarter. "We need to close that gap," he said.

"By 2015, we are hoping to achieve the top three by market share, but in terms of branding image and also pricing segmentation, we want to reach the top five," he said.

ZTE unveiled a 5.7 inch Grand Memo handset in Barcelona, firmly in the "phablet" screen dimensions that Samsung has popularized in its Note range, and the ZTE Open, a smartphone running on Mozilla's Firefox OS open ecosystem.